Fyfe: More jobs could be cut

Last updated 08:07 20/11/2008

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Air New Zealand is not ruling out further job losses on top of the 200 redundancies announced yesterday due to a slump in long haul travel.

In a bid to save more than $20 million a year the airline is slashing the 200 from its workforce of about 11,000.

Air New Zealand chief executive Rob Fyfe said the volatile airline sector made forecasting impossible and more layoffs could not be ruled out.

"I am not saying this is the end because I don't know where the end of this recession cycle is," he told Radio New Zealand.

However, if businesses did not adapt or react to customer demand they could make the situation worse for staff further down the track.

Newly elected Prime Minister John Key, flying to Peru for the APEC summit this week, met with Air NZ management yesterday, and said afterwards the job losses were an example of the serious challenges posed by the international economic crisis.

Mr Key, who is also Tourism Minister, said he wanted to work with the tourism industry so New Zealand could pick up a larger share of a declining international tourist market.

The good news was that when the New Zealand dollar dropped, it made the country more attractive to visitors. However fuel became more expensive.

He said that for the past year all airlines had been hit by record fuel prices and then plunging demand amid global economic turmoil.

Mr Fyfe said it cost about $100 million a week to run Air New Zealand and things could go wrong rapidly if costs were not contained.

The business had a 5 percent profit margin.

The airline had parked one 747 up and another aircraft would join it by early next year.

Capacity in the airline's long haul business was 8 percent lower than last year.

Mr Fyfe said there had been a significant downturn in inbound tourist numbers and inbound visitors account for 70 percent of the passengers on long haul services.

The number of passengers carried on Tasman and Pacific routes by the airline fell by 10 percent in September from the same month last year and the passenger load factor fell 7 percentage points to 71.6 percent.

The airline carried 1.199 million passengers in the month, down 4.5 percent on the same month last year.

Mr Fyfe said Air New Zealand had been working on a number of steps to minimise redundancies including moving some staff on to part-time work and offering salaried staff the option of a four-day week and some pilots leave without pay.

There had been a freeze on hiring non-safety-related staff and the airline had cut back on part-timers to preserve fulltime jobs.

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However, cuts were now unavoidable. Most of the cabin crew redundancies - about 10 per cent of the long-haul pool - would be on a voluntary basis.

Along with about 100 long haul cabin crew positions lost there will be six jobs in recruitment, seven jobs in airline operations and 68 engineering jobs.

George Ryde, secretary of the Association of Aviation and Marine Engineers, said members understood all the redundancies would be compulsory.

He was surprised if dropping that number of engineering would increase the efficiency of the airline.

Air NZ was the only game in town and if the engineers wanted to continue their employment would have to leave the country.

When business picked up and more engineers were needed, they were nowhere to be found.


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